Defeating enemies causes various orbs to fall: green orbs which replenish health, blue orbs which restore MP, and yellow orbs which represent Munny, the game's currency, and can be used to purchase new items. However, if Sora loses all of his health, the game ends and the player must resume play from the beginning of an area or boss. If one of Sora's allies runs out of health, they will be knocked out temporarily until someone heals them. The HP meter determines the character's health, reducing whenever a character takes damage, although it can be replenished by using healing items or spells. MP can be replenished by performing melee attacks or using items. The MP meter is divided into various segments that are used up whenever that character performs magic, with more powerful magic consuming more MP. Sora, along with his allies, both possess a Hit Point (HP) meter and a Magic Point (MP) meter, which increase as they gain experience and level up. This menu is manipulated by using the right analog stick or digital pad, while movement is controlled by the left analog stick, allowing the player to navigate the menu while avoiding or approaching enemies. There is also a context-sensitive option at the bottom of the menu, usually used for interacting with the environment or performing special attacks. As players progress through the game, they can receive certain Disney characters as summons, such as Dumbo and Tinker Bell, each with their own unique abilities. An action menu, similar to those found in Final Fantasy games, found at the bottom left of the screen provides other combat options such as using magic and items, although players can also assign selected magic spells that can be instantly used whilst holding the shoulder button. Combat in Kingdom Hearts occurs in real time and involves pressing buttons to initiate attacks by the on-screen character. Most of the gameplay occurs on interconnected field maps where battles take place. Players may also choose the order in which they tackle some areas. The game progresses linearly from one story event to the next, usually presented as a cutscene, though there are numerous side quests available that provide benefits to the characters. Donald excels in magic, while Goofy excels in defense and special attacks. Donald, Goofy, and any other additional party members are assigned specific areas of strength from the outset. By choosing certain options, the player may manipulate how Sora learns abilities, grows statistically, and gains levels.
The tutorial allows the player to select from one of three main attributes―strength, defense, or magic―for Sora to excel in and one to lack in. Unlike other games of its type, Kingdom Hearts allows a degree of character development customization through a short tutorial found at the beginning of the game.
As enemies are defeated, the player characters gain experience and grow stronger, gaining access to new abilities. Like traditional role-playing games, Kingdom Hearts features an experience point system that determines character development. In some worlds, the party changes its appearance, has abilities unique to that world or both the characters can fly in Neverland, acquire aquatic forms in Atlantica which enable them to survive underwater, and gain Halloween costumes in Halloween Town to blend in with the locals. For instance, Jack Skellington can join Sora's party in Halloween Town, but cannot accompany the player elsewhere. Donald and Goofy comprise the party in most areas, but nearly every level features a character who may replace them. All other party members are computer-controlled, though the player can customize their behavior to an extent through the pause menu. Sora is directly controlled by the player from a third person camera angle. The main battle party consists of three characters: Sora, Donald Duck, and Goofy. Kingdom Hearts is influenced by its parent franchise, Final Fantasy, and carries gameplay elements over into its own action-based, hack and slash system.